KETA CIRCULAR-12/2002-2003
Keta/circular/12/2002-2003 21, February, 2003
Pre Budget Discussion
The new Kerala Budget for the year 2003-2004 will be presented by the State Government very shortly. While preparing the new budget, the Government invited various trades representative to here their grievance & suggestions for making the coming budget more acceptable. Keta has received an invitation from the Finance department for Pre-Budget discussion. The venue of the meeting was at the Chamber of Minister of Finance, Government Secretariat, Thiruvananthapuram on 6th February,2003.I attented the meeting with the Keta President Mr. E.V.George and Tax Advisory Committee Convener Mr.Jayaprakash and presented Keta's suggestions to the respected minister for adequate steps.On the discussion with Hon'ble Finance Ministers Shri.K.Sankaranarayanan and Commissioner of Commercial Taxes Shri.V.Somansundaran I.A.S. and other officials ,we have presented our suggestion in an effective way and made detailed and lengthy discussion on all points mentioned in the suggestions. Finance Minister had expressed a positive response to Keta's suggestion and views. We hope that in the new budget our suggestions will be considered in a better manner. A copy of the Keta's suggestions is reproduced below for members information .
Jacob Mathew
Secretary
Keta/35/445/2002-2003 5 January,2003
The Honourable Minister for Finance 5
Government of Kerala
Thiruvanthapuram
Respected Sir,
Sub: Pre-Budget Discussion with representatives of Trade,
Industry and Commerce Organisations -Reg.
Ref: Your Letter No.5558/BW.A1/2003/Fin dated 21-01-2003
We thank you very much for inviting us for Pre-Budget discussions. We feel highly honoured and give our suggestions for your favorable consideration.
Section 2 (xxxviii) Trade Discount
As per this section apparently it is seen that only cash discount is allowed to be deducted .As per Rule 9 (a) of the existing KGST Rules all types of discounts are to be allowed as deduction. It is suggested to include trade discount also specifically in the provision.
Section 6 (1) Exemption Limit
The Exemption limit presently given in the Act of Rs .2 Lakhs may be enhanced to Rs .25 Lakhs .
Section 6 (4) Presumptive Tax
As per present Act the presumptive Tax is applicable only for those dealers who's turn over is Rs.2 Lakhs to 5 Lakhs.Since the tax is to be paid by the dealer from his pocket and not recoverable from the consumer, the turn over limit may be enchance to Rs .15 Lakhs.
Section 7 Special Additional Tax
Under Section 7 of the bill provision is made for imposing Special Additional Tax,which I against the object and principle of VAT.
Further, it is also specifically mentioned in Section12(4) that the dealers are not eligible for input tax credit on this .Hence Special Additional Tax may be withdrawn
Section 12 (5) (n) Closing Stock
As per proposed amendment,no input tax credit will be allowed on the closing stock held by the dealers on the date of implementation of this Act,for which the sales tax has already been paid.Hence this clause may be withdrawn
Section 12 (10) Suspended Dealers
It will not possible for a dealer to ascertain registration of a particular trader is suspended or not .There is no rhyme or reason in denying the input tax credit for purchasing goods from such dealers .It is not fair to penalize a dealer for any purchase from another Registered Dealer, as the punishment should be to the person who has committed the offence by selling while under suspension.
Section 14(1) Turn over limit for Registration
The turnover Limit for registeration as per proposed Rs.1 Lakhs may be enhanced to at least Rs.10 Lakhs
Section 15 (12) Re-registration
As per this Section it is mandatory that the existing registered dealers are to get themselves re-registered under VAT.We suggest that all dealers registered under present K.G.S.T.Act may be automatically treated as Registered dealers under VAT.Further as per Section 16 (2) it is noticed that the Sales Tax department can demand an amount equivalent to six months sales tax payable as security for giving new registration under VAT.This is absolutely unfair to the existing registered dealers and is also unjust Since under VAT monthly assessment is to be completed.Hence this clause demanding 6 months security may be withdrawn
Section 15 Registration Fee
The Proposed Registeration fee varying from Rs .250 /-to Rs .20,000 -is very exhorbitant and this may be reduced to a maximum of Rs .1000.
Section 17 Suspension of Registration
This Section gives power to the Deputy Commissioner to suspend registration of the dealers in certain situation.Since this can be misused and is harmful to the trades,this clause may be withdrawn
Section 20 Filling of Return
As per this Section ,it is mandatory for the dealer to submit forms like Form "18",C Form etc along with monthly return .As per the existing Sales Tax rules only one C Form/Form 18 is to be furnished coverning the entire transaction for that particular financial year.Hence monthly return filed without such firms should not be rejected on above grounds.
Section 22 (iv) Audit of Accounts
As per this Section the Assessing Authority are given power to appoint another auditor from the panel approved by the departments to audit the accounts of the dealer ,if they are not satisfied with Audited Accounts submitted by them.This may please be withdrawn.
Section 32(ii) & 32(5) Rate of Interest
As per this Section32(ii) payment as per the demanded notice has to be made within 15 days against the present provision of 30 days .As per 35(5) a,b,the rate of interest is 12% for Ist 3 months & 24% for remaining period .This is highly excessive especially considering the present interest rates,hence this may please may reduced to 10%.
Section 33(1&2) Revenue Recovery
The power vested with Collector ,which is proposed to be transferred to Assisstant Commissioner for initiating revenue recovery proceedings may please be withdrawn.
Section 43 (3) a,b Power toSeize & Inspection
This Section provide enormous power to Tax authorities to inspect the business premises and on special sanction even the residence of dealers,break open any box, take custody of goods and put it on auction. We strongly feel these powers can be misused by the authorities,and hence should be withdrawn.
Fees for Appeals
We note that fees for filling appeals has been increased exorbitantly as detailed below
For filling appeal before appellate Tribunal is raised from Rs.500 -toRs.1000
Fee for filling appeal before Deputy Commissioner (Appeal) is raised from Rs.200-to500
Fee for applying for stay before Tribunal is raised from Rs.250-toRs .300
Fee for submitting stay petition before Deputy Commissioner is raised from Rs.100-toRs.200
Fee for submitting appeal in High Court of Kerala is raised from Rs.250 toRs.1500
In the present financial tight condition,trades are not in a position to pay this heavy filing fee.Please kindly do not increase the filing fees from the present rate.
Section 68 Incomplete Return
As per this section it is noticed that the Assessing Authority is empowered to impose fine of Rs.50000 and imprisonment upto one year for filing incomplete monthly returns.It may be noted that it is practically not possible to submit forms like Form 18,"C"Forms etc along with monthly return especially when these forms are not readily available with sales tax department.
Further as per the sales Tax rule there is provision that only one Form 18/'C' Form is required to be submitted coverning the transaction for one year.Hence the Assessing Authority should not be vested with this power imposing fine for filingincomplete returns .
Section 86(4) Interest on Refund
As per this Section interest on refund is 10%.Payable from the date of receipt of Order etc.In case of interest payment by the dealer the interest is payable from the date of assessment or due from the date of return.It is suggested that interest shall be paid on refund from the date of excess payment .
Entry Tax
We noted that at present there is no specific logic or rule in collecting Entry Tax. We suggest that Entry Tax if at all applicable in future,shall be collected only from those who procure the materials from outside state against concessional CST on 'C'Form for their own use.In short Entry Tax should not be collected from Registered dealers who purchased the materials on 'C' Form for resale collecting necessary tax applicable.
Tax Deducted at Source
The tax deducted at source has to be remitted to the department within 5 days. Present rule is that the amount has to be remitted on or before 5th of next month. By the new provision number of remittance will be required in some month.We suggest that the existing rule may be kept unchanged.
Tax Advisory Committee
We suggest that Sales Tax Advisory Committee at state and district level may be constituted with proper representation to the trading community.
We suggest that introduction of Value Added Sales Tax (VAT) may be postponed to financial year 2004 especially since necessary infrastructure neither at Government level is prevalent at present
We once again thank you for give us an opportunity to present our points and hope that you would give due consideration to the same while preparing the .Budget for the financial year 2003-2004.
Thanking you,
Yours faithfully,
For The Kerala Electric Trades Association
Sd-
E.V. George Jacob Mathew
(President) (Secretary)
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